We had a China link up story yesterday with a small Australian company with lots of talk about big sales potential and profitability, but no immediate market reaction.
That was the outcome of yesterday’s announcement from Sydney-based tiddler, renewables group, CBD Energy which told the market in a statement that it was partnering with China’s second-largest state-owned utility to develop $6 billion worth of wind and solar energy projects in Australia.
The news saw CBD shares dip to 17.5c in early trading before they recovered to close unchanged on 18c. At that price the company is valued at just $82 million.
CBD Energy said in the statement that it had finalised a joint venture with the China Datang Renewable Power Co and solar equipment maker Baodin Tianwei Baobian Electric Co.
The companies will form a new entity called the AusChina Energy Group, which aims to develop $3 billion worth of wind and solar power plants in Australia within three years and $6 billion over eight years. Ownership of the joint venture is Datang Renewable 63.75%, Tianwei Baobian 12.50% and CBD 23.75%.
"This represents one third of Australia’s projected wind energy market," CBD said in the statement.
It said the "current project list comprises 1500 MW over three years or approx A$3 billion" and the "China partners to provide equipment and funding, establishing competitive advantage".
AusChina will make a final investment decision this week on its first 100 megawatt wind farm project at Taralga in NSW.
"We’re not one of the big players in this area yet, but we have a desire to grow our business in the renewable space," general manager Gerry McGowan said in an interview with AAP.
In the statement CBD said it had "completed documentation which establishes a stapled investment joint venture group with two of China’s largest renewable energy businesses.
"Parties to the stapled investment joint venture group, named AusChina Energy Group, are Datang Renewables (Singapore) Pte. Ltd (Datang Renewable), Baoding Tianwei Baobian Electric Co., Ltd (Tianwei Baobian) and CBD Energy Limited.
"The joint venture establishes a new stapled entity, which will comprise a company (AusChina Energy Development Limited) which will be stapled to a unit trust (AusChina Energy Development Trust), with this stapled entity to be owned by the joint venture partners.
"The establishment of the AusChina Energy Group has been approved by Australia’s Foreign Investment Review Board as has its first project, ”CBD said in the statement yesterday.
"A CBD entity will provide project management of developments, including negotiation of development approvals and power purchase agreements for completed projects.
"AusChina Energy Group will develop and sell projects as well as own and operate completed wind farms for the longer term.
"A CBD entity will source additional projects for AusChina Energy Group and will not develop wind projects as a separate entity.
"Similarly, Datang Renewable and Tianwei Baobian will develop any Australian wind energy opportunities through the joint venture.
"New projects may include solar thermal and energy storage opportunities.
"AusChina Energy Group is intended as a long term joint venture although its status and progress will be assessed after the initial three years."
